The Guardian newspaper has issued a series of articles about academic economics in the past few weeks. They include Mainstream economics is in denial: the world has changed, Economics students need to be taught more than neoclassical theory, and Orthodox economists have failed their own market test. I limit comments here to that last piece, by Seumas Milne, as Mr. Milne seems most intent on pegging the economics critic crankometer, but Mr. Milne’s themes are repeated in the other articles.
But, Milne’s claim that economics students should be exposed to multiple modes of thinking about economics seems uncontroversial. He echoes, for example, the National Council for Excellence in Critical Thinking’s (NCECT) advice that
Students successfully completing a [course] in scientific foundations will demonstrate a range of scientific thinking skills and and abilities which they use in the acquisition of knowledge… [including the ability] to identify relevant competing scientific points of view.
What is wrong with the notion that students should acquire the skills of critical thinking by grappling with the controversies surrounding mainstream economic theory? I argue, first, that materials offered by opponents of mainstream economics are actually designed to misinform and obfuscate the real controversies in economics. Educational materials offered to encourage “critical thinking” consist mainly of “evidence against” mainstream economics—a “catalogue” of specific cases for which economic theory has presumably failed to provide a complete or compelling explanation.
Second, I argue that opponents of mainstream economics confuse the source of economic controversies in two important ways. The first is semantic; Mainstream economics is incorrectly equated with Neoclassical economics, which in turn is incorrectly equated with all modern economic theory. Materials from the Guardian, for example, typically trumpet the shortcomings of neoclassical theory—conveniently ignoring more than a century of research that has expanded, modified, and some cases, even replaced strictly “neoclassical” ideas about economics.
The Guardian complains that instructors are required to teach that only majority opinions constitute “the” scientific perspective. However, this claim only serves to confuse the scientific and curricular issues further. First of all, many scientific ideas are not presented at the undergraduate level at all, despite being majority opinions. More important, scientific theories and models do not take their place in either the research or the education communities because they have the “right” to be represented. Minority views in the sciences must earn their place by successful demonstration and usefulness in addressing key research issues in the discipline; these are the criteria by which they are accepted. In contrast, outsiders are likely to be persuaded not by the scientific evidence (which may be too specialized or complex for them to understand completely) but by the arguments based on our cultural value of fairness and equality–a perspective derived from the First Amendment and other “civil rights.”
In conclusion, the locus of the controversy the Guardian inflames is within the public domain. It is perhaps most remarkable that the “controversy” over teaching economics has not changed its character, even as economic theory has discovered and incorporated many phenomena previously “undreamt of in [our] philosophy.” Indeed, even as the scientific community accepts new ideas and models that strengthen and invigorate mainstream theory, critics of mainstream economics continue to argue that these same models weaken the scientific position of mainstream economics.
I should probably note that all of the above text beginning “What is wrong with the notion…” is very lightly edited quotes from the essay “Why Teach Evolution?” by biologists Andrew Petto and Laurie Godfrey in the collection Scientists Confront Creationism. I changed “evolutionary theory” to “mainstream theory,” “Neo-Darwinian” to “neoclassical,” “we” to “I,” and “the Discovery Institute” to “the Guardian.” The gist of the article is that creationists commonly attack introductory biology textbooks on highly questionable and ideologically-motivated grounds, pounce on errors or outdated information in such textbooks, and demand that the obscure and/or scientifically invalid theories which conform to their religious ideology be taught along with mainstream biology.
I do not mean to imply that economic theory is as well-understood as the fact that evolution occurred (although evolutionary theory—modeling how evolution actually occurred—is subject to many of the same limitations as economic theory, and is often based on strikingly similar formalisms). But I do think that the criticism of undergraduate education in economics offered by the Guardian parallels in form and intent attacks by creationists on introductory education in biology: they are thinly-veiled attacks on the discipline itself rather than course content, and they are offered by people with no real understanding of the actual scientific issues on misguided ideological grounds. The only substantive difference is in one case the ideology is religious and in the other it’s political.
There are actually problems with undergraduate education in economics. The point of an academic, as opposed to a professional, degree is to train students to understand and perhaps, if they continue their studies, to contribute to the research literature. Judged relative to that goal, the current curriculum is not sufficiently mathematical and places far too much emphasis on theory relative to empirics, amongst other problems. Some long-standing core material (e.g, the Marshallian theory of the firm) could be ditched to make space to cover more recent theoretical developments and empirical results and methods. This will happen over time, and hopefully we can prompt it along.
But the Guardian and its fellow travellers have quite a different set of reform criteria. Their criteria are political, not scientific. No, we don’t need more courses in Marxian economics, for example. Marxian economics comprises zero percent (give or take) of the academic literature, and thus under the criterion above for academic degrees, even if one thought Marxian approaches superior it would be irresponsible to replace large portions of the curriculum with Marxian theory. It would also be infeasible, as there are zero Marxian economists in the vast majority of economics departments.
The good news is that if the writers at the Guardian would put down their pitchforks and pay attention to what’s going on in mainstream economics, they’d find that economics is not the enemy of progressive political opinions—the “neoclassical” modeling approach of optimization plus equilibrium is routinely used by everyone from Analytical Marxists to evolutionary biologists; exploiting this extremely useful modeling strategy does not imply any particular political position. It cannot be emphasized enough that the Guardian’s overarching premise that “neoclassical,” “orthodox,” “mainstream,” “neoliberal,” and “free market” all mean the same thing when used before the word “economics” is utter nonsense.
Undergraduate textbooks are, contrary to the Guardian’s claims, full of models in which the market fails and the situation can be improved by policy interventions, including but not limited to models in which asymmetric information leads to market failure. Mainstream economics is not “free market economics,” as anyone can verify simply by opening an economics 101 textbook, or certainly by taking more advanced but still undergraduate courses in, well, any field, but notably environmental, health, development, labour, behavioral, or public economics. Or, for that matter, econometrics, since most economic research is empirical and econometric theory is kind of hard to place on the political spectrum.
What would Mr. Milne and his colleagues find if they were to actually read some of the mainstream literature, even as presented in undergraduate textbooks? They’d find that economists actually spend a lot of time discussing issue they allege we ignore. For example, how do we know that income inequality has become worse in many countries over the past several decades? We know that because mainstream economists found and reported that result in mainstream journals using mainstream methods (there would be no “Occupy” movement without mainstream economists). There are hundreds of papers published in mainstream journals every year measuring inequality, attempting to empirically and theoretically explore its causes, and attempting to estimate its consequences in terms of well-being in a number of dimensions, including but not limited to mental and physical health.
Milne’s claim that economics has little to say about financial crises is similarly ill-informed—mainstream journals are full of papers studying the causes and consequences of the crisis, and many more will appear as more data become available. One cannot reasonably argue that economists have little or nothing to say about financial crises, but one could reasonably argue that economists didn’t do enough research on financial instability prior to the crisis, but in order to make such an assessment one would have to have actually read the literature, rather than ignorantly and uncharitably concluding that, for example, Ben Bernanke assumed away the possibility of a crisis.
Undergraduate economics training could use an overhaul, but doing so in the manner suggested by the Guardian would be an enormous step backwards.
- 28 November 2013 at 9:11am
- A Response to Commentary on the Post-Crash Economics Society | Post-Crash Economics
[…] ‘anti’ neoclassical economics; we are pro-pluralism in a young ...